GE for a long time was one of the bluest Blue Chips. Especially under Jack Welch, GE was a synonym for great management and clock work like profit growth.
Now things look different. we just need to look at the 1 year chart:
Topdanmark – The Danish Cannibal
Topdanmark, a local Danish Insurance company has been on my extended “to do” list for a long time for 2 reasons: It is the second most profitable European insurance company after Admiral (based on ROE) and as Charlie Munger would call it a “true Cannibal”.
Those are some selected numbers from Topdanmark over the last 18 years:
Everyone who has read Thorndikes book “The Outsiders” clearly knows that capital allocation& capital management is one of the most important factors in creating long term shareholder value. After I watched Thorndike give a briliant talk at Google on this topic, I decided to write down my own thoughts on the topic.
What is CAPITAL ALLOCATION & CAPITAL MANAGEMENT anyway ?
CAPITAL ALLOCATION is simply what you do with your profits/cash inflows once they are in your account. You can do a lot of things with it. Thorndike in the talk above uses 5 uses, I would add another 2 (in bold)
1. Reinvest: Maintain your existing assets/infrastructure/operations
2. Grow organically: Expand your business by buying more machines/outlets/opening stores etc.
3. Expand your business by M&A
4. Pay back liabilities (debt, payables, pension liabilities etc.)
5. pay dividends
6. buy back shares
7. just leave the cash on your account and wait for better opportunities
Movado is the second US-based company specializing in watches (see my previous posts on Fossil part 1 and part 2). The company has a quite interesting history. Cuban Refugee Gerry Grinberg founded the company in the 1960ties basically as a Swiss Watch importer. Later on they actually acquired the rights to the Movado brand with the iconic Museum Watch.